1. Field of the Invention
This invention relates to the general field of payment systems, and more particularly, to a self-contained payment system using digital vouchers for payments from individual to individual, individual to business, from business to individual and from business to business.
2. Background Art
Today there are a number of different payment systems in use allowing an individual or a business to make payment to another individual or business. The most common are paper bills and coins, debit and credit cards, checks, traveler checks and others. Newer forms, many still in field trial stage, are home banking, smart card based methods or on-line methods for the internet and intranets.
These payment systems are all sub optimal because they are limited in the scope of how and in what situations they can be used. Therefore, it is necessary today to use a range of payment systems in parallel:
paper bills and coins are anonymous in use, can be used freely from individual to individual, individual to business, from business to individual and from business to business. However, they require a physical transfer, and micro payments of less than $.01 are not possible, payments must be divisible by $.01. If lost or stolen, paper bills and coins can not be replaced. PA1 debit and credit cards protect the user against loss and fraud. However, the transactions are not anonymous and they can only be used to pay merchants who are registered with the appropriate debit or credit organization. In addition small payments (less than $5) are generally not accepted. PA1 checks are practical to send a payment to another distant party, they also protect the user against loss. However, since they are a paper based system they need to be physically transported to the recipient's bank which can be a multiple-step and time consuming process. In addition the funds are often not immediately available to the recipient, who might have to wait until the check cleared the bank. Check payments are not anonymous. Payments of less than $.01 are not possible. PA1 home banking as a payment system replaces generally the physical check with an electronic check, shortening the time for the recipient to receive the funds. However, the other disadvantages with respect to checks remain. In addition home banking requires a PC with a modem. PA1 smart card based systems. The smart card is used as a medium of storage for value. The cards act in conjunction with a reader to allow payment. Therefore a physical contact needs to be established between the payer and the payee. There are a number of different underlying technological approaches: PA1 one technology approach (such as the field trial by Mondex in the UK) is anonymous, modeled after the paper bill and coin system. Currency can freely and without restrictions be moved from individual to individual, individual to business, from business to individual and from business to business. These systems so far do not work for internet transactions and payments of less than $.01 are not possible, payments must be divisible by $.01. If lost the funds can not be replaced. PA1 most other smart card approaches are mostly non-anonymous and are limited to a payment from an individual to a registered merchant, in addition the merchant can not use the funds immediately, the funds must first clear the banking system. (examples are the technologies behind field trials such as Visa Cash, Mastercard, Proton, EC-Card, American Express, SmartCash). If lost they generally can not be replaced, the exception is the American Express system which is modeled after the traveler check business. PA1 internet systems (such as CyberCash, NetBill, First Virtual, DigiCash or Millicent) are all in an early development or field trial state. They plan to offer micro payment options (First Virtual and CyberCash about $1 as smallest transaction, others about 1 cent). However, all these systems are limited, they can only be used on the internet. There is no payment system which can work on the internet ("on-line") as well as "off-line". Furthermore, most approaches can only handle payments from an individual to a merchant, the exception being a planned system for Deutsche Bank in Germany by DigiCash which is expected to allow individual to individual payments. Questions of anonymity are mostly not resolved at this time. DigiCash, a Dutch company is offering an anonymous approach. Most US based systems in development (for example CyberCash, Millicent) are mostly not anonymous. PA1 Same payment system can be used for on-line and off-line payments. PA1 Payment system can be used universally: pay anyone and receive funds from anyone, person or business, anywhere in the world. PA1 Payments are available without restrictions and delays once received. PA1 Micro payments of less than $.01 are possible, which is of value for future on-line usage based payment structures. PA1 Privacy is guaranteed, yet the overall payment system is protected against illegal attempts to corrupt the system. PA1 Transportation of payments across the network is secure utilizing the latest encryption technologies. PA1 Funds can be replaced when lost. PA1 Integrity of national and international banking systems is guaranteed. PA1 Receipts for payments are provided. PA1 Multi-purpose use. PA1 the remote devices can be used in an on-line environment such as the internet, private networks, telecommunication networks etc. as well as in an off-line environment such as a face-to-face transaction. Vouchers according to the invention can be freely transferred from on-line to off-line and back to on-line. PA1 vouchers according to the invention can be passed from remote device to remote device and therefore from an individual to a business, from a business to an individual, from business to business as well as from an individual to an individual. PA1 vouchers according to the invention can be used without restrictions and delays as soon as they have been received. PA1 there is no value limit to a voucher according to the invention therefore macro and micro payments (less than $.01) are possible. PA1 the account numbers of the central system can be kept anonymous using a translation algorithm protected by encryption. Therefore, the system is anonymous and the privacy of the individual is protected. However, the logs of the vouchers according to the invention can be read by authorized persons to track irregularities and therefore to prevent and trace illegal acts such as counterfeiting. It is a policy issue for the operator of the payment system according to the invention, not a technical issue, to set the rules for revealing an individual's identity and transaction history. PA1 the transport of vouchers according to the invention through any type of network is secure. With the help of the attached logs the source of irregularities ( e.g. counterfeiting) is easily and quickly tracked. In addition, common encryption technologies, as well as digital signatures, can be applied to add another level of security when the vouchers are in transit. PA1 the integrity of the external system, for example the world financial systems is protected. A payment system according to the invention is separated from the external system. Within the payment system vouchers are used which are reconciled before they can be redeemed in the external system. PA1 a user can receive receipts. PA1 if a remote device gets lost, with the help of the receipts, the vouchers having been stored in the remote device at the time of loss can be identified and therefore be replaced. PA1 the payment system can handle different currencies. PA1 the payment system according to the invention includes the capability of being used as a multiple purpose system, for example, to manage loyalty programs such as frequent flier miles programs and to add other information and data to a voucher at a time of transaction such as coupons .
Therefore, from a user's point of view all payment systems in existence as well as in development have a range of shortcomings. An ideal payment system should fulfill the following criteria:
Payments can be made in an on-line environment such as the internet, private networks, telecommunication networks, etc.,. as well as in an off-line environment for face-to-face transactions. Funds can be freely transferred from on-line to off-line and back to on-line.
Payments can be made from an individual to a business, from a business to an individual, from business to business as well as from an individual to an individual. The payment system can also handle multiple currencies.
Payments can be freely used as soon as they are received. Furthermore, the transportation of a payment in the case of a non-face to face transaction is nearly instantaneous regardless of the physical distance between the payer and payee.
The system is anonymous, the privacy of the individual is protected. However, the system can recognize certain illegal transactions and the transaction history can be made transparent allowing the tracking of these illegal transactions. It is a policy issue not a technical issue to set the rules of revealing an individual's identity and transaction history.
Irregularities in the payment system are detected and can not enter the banking system and therefore have no impact on the money supply of a country.
Payment system can in addition be used to handle other payment type programs such as loyalty programs (for example frequent flier programs) or benefit transfer programs (for example food stamps).
None of the payment systems in use today fulfills all or most of these criteria.
The payment system according to the invention fulfills the above criteria and is therefore superior to all conventional payment systems.